May 16th, 2012
07:00 AM GMT
(CNN) – Which platform is better to advertise on, Google or Facebook?
On Tuesday, General Motors announced it will stop paid advertising on Facebook. "This happens as a regular course of business and it's not unusual for us to move things around various media outlets," the company said in a statement. But coming the week Facebook has its initial public offering, the announcement is raising more than a few eyebrows and begs the question:
Is Facebook really worth $100 billion?
WordStream, a U.S.-based search engine marketing company, released a study Tuesday comparing the advertising influence of display ads on Google versus ads on Facebook. The results: While Facebook is good, Google is better.
“Facebook's advertising growth has been strong – but it hasn’t kept pace with growth in its user base,” WordStream’s Larry Kim wrote in his blog.
Facebook’s click-through rate (CTR) on ads is less than 0.05%, according to WordStream’s calculations, “just half the industry average for banner ads,” Kim wrote. “Why? It may be Facebook’s relatively slim offerings in terms of ad formats and targeting options.”
Facebook currently has only two options for advertisers – a standard ad and sponsored stories. “This is paltry compared to Google’s display network ad format options: text ads, image ads, flash-based image ads, in-video ads, as well as ads for mobile web and mobile games,” Kim wrote.
“Given its impressive global reach, Facebook has the potential to be as much of an advertising behemoth as Google,” Kim said. “But the question remains – does Mr. Zuckerberg even want Facebook to be an advertising-based company? In his 2,500+ word letter to shareholders, he only mentioned advertising once.”
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